REIT to REPE Strategy
Good morning guys,
I did a cursory search of the forum to try to ensure that I am not duplicating content; I think that my question is specific enough (let me know otherwise and I will take it down).
I am currently working as an analyst in acquisitions & development at a small, private REIT in the NYC area with ~750M of Assets. I am also finishing my MSRE at NYU (3 courses left), and I interned last summer at a larger REIT (10B+). Both my internship and current role deal/t with net lease acquisitions --mostly single tenant.
My question is this: In order to eventually break into REPE, would it be better for me to pursue an analyst position at a better-known REIT before applying to REPE roles, or would it be more prudent to apply for REPE roles at a lesser-known shop before working my way up to a bigger REPE firm? Will this type of REIT experience pigeonhole me at, say, the associate level?
Thank you for any feedback and for taking the time to read this.
A lot of people think that REIT's and REPE is completely different, but if you are doing acquisitions are a REIT vs in a REPE Fund, it's the same job. The main difference is with a REIT, you will probably be thinking about how certain acquisitions will effect your stock price on day 1 of the acquisition. Overall, same job, don't worry.
If you want to stay in the single tenant net lease sector, you're probably fine where you are. Otherwise, I would suggest going to get broader experience where you will underwrite all types of assets. With that said, it doesn't matter if it's at a public reit, private reit, REPE fund, life co. investment manager, etc.
Thanks so much for the reply, pudding. Over time I would like to gain exposure to a broader range of asset types, so I appreciate your advice
this is tough. sounds like your goal is one of the top REPE shops. basically you're asking, if that is the goal, would i be better off (in the meantime) at a shitty REPE group or a top REIT? i would say top REIT. just know that the odds are stacked against you. if you really want to be at a Northwood or Colony or somewhere like that, you should not be getting a part-time masters, you should be getting a full-time MBA from Stanford.
prospie, thank you so much for your help. I would say that my goal is/was to be at a top 50 REPE shop; I know that what you are saying is true regarding the Colony/Northwoods. Do you think it would be more realistic for me to look at REITs as the end game?
You do not need an MBA from Stanford to get into Northwood!! A linkedin search will show you that- https://www.linkedin.com/search/results/people/?facetCurrentCompany=%5B…
I interviewed with them last year and most of the people I spoke to hand't done an MBA :)
I don't think being with a REIT is the problem here. The problem to me is the type of deals you're doing - net lease / single tenant acquisitions. If I were browsing resumes for an analyst/associate hire, I'd want to make sure they demonstrated experience with a variety of property types.
That definitely makes sense. I will do whatever I can to gain some more experience with varied property types. Thank you for your insight
Regarding the green box, response...I agree, but to an extent disagree, respectfully. I have worked at both large REPE firms in finance/acquisitions and the same role at a mid-large public REIT.
From the acquisitions side, the deal terms and criteria are very different. For example, at my REPE job, all JVs and non-JV's were primarily IRR driven. We would look at EMs, etc. sure, but the investment committee and green-light was usually a by-product of the asset's IRR and hold period. REPE was very singular for me...by that I mean each asset was really it's own strategy and deal. Switching to a public REIT, the managers could have cared less about IRR, to the point they rarely even reported it on a project. their entire philosophy was making sure that they are making Accretive acquisitions to their platform/NAV/stock price. REPE looks at deals/performance on a "cash in cash out" basis. They rarely care about EBITDA or FFO/AFFO. Conversely, FFO rules the REIT world. IRR has little to do with FFO, hence the difference in strategy or how the acquisitions team may approach a deal.
Also, perhaps the biggest difference in my eyes, is capital structure. Remember PERE, depending on the firm, may use a closed-end fund, or discretionary capital. REITs (excluding the odd NTREIT world) are publicly traded. REPE will often use secured debt for deals. Most well-known REITs use a revolver, with a small portion employing secured debt. Having daddy's AMEX (the revolver), is a HUGE distinction between REITs and PERE. It allows REITs to be much faster and more nimble with buying assets they believe in. Whereas a PERE development/acquisitions firm needs to go out and secure financing (unless they take the deal down all cash from the funding, which is rare).
So to abridge the rambling, I think your experience working in acquisitions at PERE vs REIT will be different. This will be due what metrics each side values when approaching a deal. Also, due to the capital structure, and the limits/benefits it will have on securing that pipeline. sure the model itself will be similar, heck identical. But when it comes to what really drives the deal to completion, and how the acquisitions platform is managed - there are significant differences.
Best of luck!
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